Credit Reporting Considerations

• If you honor a debt repayment agreement, the lender will often report that positive payment history to the major credit bureaus, according to the FTC. But if you miss payments, make payments late or simply fail to pay on the account, the lender will report that as negative credit information for up to 7 years.
  
  

Lawsuit Potential

• Failing to pay a debt can result in the lender filing a civil lawsuit against you, according to the book "How to File for Chapter 7 Bankruptcy." Also, the lender can receive a judicial order that allows him to garnish part of your wages until the debt and associated legal fees are repaid.
  
  

Employment and Housing Considerations

• Not honoring a debt repayment agreement, even if you don't ultimately file bankruptcy, will still negatively impact your credit, according to both the FTC and Experian. In some cases, you cannot get certain types of jobs or housing if you didn't pay your debts as promised.